I wanted to see what he had to say about Charleston, but Jim just reposted the same gun violence post he's posted after every other attack. I'd really like to see him say something about racism in the USA.

I look at the GOP candidates for president [and] I think, seriously? This, this right here, this is the best you can do?

If Jeb Bush was an airplane, it would be like attempting takeoff with one engine on fire.

Bush opens his bid for President this coming Monday with an underfunded campaign in disarray and already in damage control mode to the accompaniment of headlines that keep using the phrase “Failure To Launch.”

Starting out on the defensive? Not really the most auspicious beginning for the scion of a hereditary political dynasty and the guy who was supposed to pull Republican chestnuts out of the fire.

Still, that's better than Mike Huckabee, who apparently doesn't actually know anybody who isn’t under investigation. These two are the GOP's front runners, that’s right, the Stephen Baldwin of the Bush family and a guy who pals around with child molesters. [...]

...virtually all of the newly developed models are based on the highly misleading ‘intermediation of loanable funds’ theory of banking (Jakab and Kumhof 2015). We argue instead that the correct framework is ‘money creation’ theory.

In the intermediation of loanable funds model, bank loans represent the intermediation of real savings, or loanable funds, between non-bank savers and non-bank borrowers;

Lending starts with banks collecting deposits of real resources from savers and ends with the lending of those resources to borrowers. The problem with this view is that, in the real world, there are no pre-existing loanable funds, and intermediation of loanable funds-type institutions – which really amount to barter intermediaries in this approach – do not exist.

[...]

Specifically, whenever a bank makes a new loan to a non-bank (‘customer X’), it creates a new loan entry in the name of customer X on the asset side of its balance sheet, and it simultaneously creates a new and equal-sized deposit entry, also in the name of customer X, on the liability side of its balance sheet.

The bank therefore creates its own funding, deposits, through lending. It does so through a pure bookkeeping transaction that involves no real resources, and that acquires its economic significance through the fact that bank deposits are any modern economy’s generally accepted medium of exchange.

So apparently macroeconomists still believe that the government "prints money" and banks only lend it, when really the banking system creates all money, and any crisis which happens results in an aggressive monetary contraction starting by the banking system. Read the article and go to Wikipedia to understand any terms you have a problem with,.

Now, here's a trio of articles for anyone who likes to blather about the evil Fed "suppressing" interest rates.

The debate about who is responsible for the low level of interest rates that has prevailed in most economies over the last years heated up when Ben Bernanke wrote a series of blog posts on what determines interest rates. He argued, once again, that it is the global dynamics of saving and investment the one that created a downward trend in interest rates starting in the mid 90s and that it accelerated as a result of the crisis.

Basically, there is a market for loanable funds, which takes saving and lends it out to borrowers; this is good because borrowers use those funds to finance capital investment, which is how an economy grows its GDP. This is first year macro (and the most fun and difficult part of the course, too bad they didn't spend more time on it).

The market for loanable funds clears at the equilibrium interest rate determined by supply and demand. So if you have too much saving and not enough investment, the interest rate will drop to a low equilibrium rate to clear the market.

And so, assuming for example a closed market in the US (more on that later), in the 50s thru the 70s the demographics meant you had a large cohort of borrowers and very little savings to lend. So interest rates were damn high. Nowadays, by contrast, all those boomers are wealthy (at least compared to their grandparents in the same social class decades before) retired people with a large amount of savings, and there's nobody for them to lend to, so interest rates are very low.

Of course the US isn't a closed market, things are more complicated; but Bernanke goes into this:

Bernanke blog - why interest rates are so low, part 3: the global savings glut. His post really isn't difficult to follow, it's still just first-year intro macro: he just internationalizes the US situation described above. Problem as he sees it is that the post-1997 IMF crisis emerging markets (think China, but others too) are simply doing what the IMF told them to do: save a ton of money and build massive forex reserves. Unfortunately, there's nobody for savers to lend this money to. And so you get a global saving glut.

This is all really really really really really important, and you should maybe set aside a couple hours to read all these articles, and the Wikipedia links I have included above, so that you can get a handle on this, because it affects the over-arching narrative according to which you're investing in the market long-term.

Personally, I still don't see an explanation in any of this for why the low interest rate doesn't stimulate business capital investment, driving a massive worldwide productivity boom. Maybe it's because, at a low interest rate, the money gets diverted into completely unproductive assets like household real estate? And also, the low interest rates stimulate buying equities (because even at a low yield they still pay you more income than lending does), which doesn't actually grow GDP?

Hopefully the FOMC members are aware of new research by two of the Fed's own economists, Ekaterina Peneva and Jeremy Rudd, on the passthrough (or lack thereof) of labor costs to price inflation. The research, which fails to find an important role for labor costs in driving inflation movements, casts doubts on wage-based explanations of inflation dynamics in recent years. They conclude that "price inflation now responds less persistently to changes in real activity or costs; at the same time, the joint dynamics of inflation and compensation no longer manifest the type of wage–price spiral that was evident in earlier decades."

Yeah, I do think the Fed committee reads their own employees' research, especially Yellen. And since she's married to George Akerlof I doubt she's going to go out of her way to fuck over the working class just to look like a good little central banker.

soup is good food
you make a good meal
how does it feel to be shit out our ass
and thrown out in the cold like a piece of trash?

WSJ RTE - IMF backs steps to reduce inequality. Hey, Christine? Know what really reduces inequality? Moderate inflation. Like, letting if go over 2% FFS so that the rich pay an inflation tax on their interest income and capital gains income. The only people who want inflation under 2% are the kleptocratic ruling classes, Christine, and if you want to remain in the pope's good books you had better quit worshipping at the temple of Mammon and actually start following the teachings of Christ. Speaking of which....

Suppose that Eurozone policy makers had instead stood back, and let things take their course when the markets became seriously concerned about Greece at the beginning of 2010. That would have triggered immediate default, and a request from the Greek government for IMF assistance. (In reality at the end of 2009 the Euro area authorities indicated that financial assistance from the Fund was not “appropriate or welcome”: IMF 2013 para 8) In these circumstances, given the IMF’s limited resources, there would have been a total default on all Greek government debt.

If that had happened, the IMF’s admittedly large assistance programme (initially some E30 billion, but increased by another E12 billion in later years), would have gone to cover the primary deficits incurred as Greece tried to achieve primary balance. That E42 billion is very close to the sum of actual primary deficits in Greece from 2010 (which includes the cost of recapitalising Greek banks).

What that means is that the involvement of European governments has not helped Greece at all. With only IMF support, Greece would have suffered the same degree of austerity that has actually occurred. The additional money provided by the European authorities has been used to pay off Greece’s creditors, first through delaying default in 2010 and 2011, and then by only allowing partial default in 2012.

[T]he strategy of Greece’s European partners is pretty clear: It’s all about regime change. One senior Greek official involved in the negotiations referred to it as a “slow-motion coup d’état.” And those who were paying attention could see this from the beginning. Just 10 days after Syriza was elected, as I noted previously, the European Central Bank cut off its main line of credit to Greece and then capped the amount that Greek banks could lend to the government. All the hype and brinkmanship destabilize the economy, and some of this is an intentional effect of European authorities’ statements and threats. But the direct sabotage of the Greek economy is most important, and it is remarkable that it has gotten so little attention.

The unannounced objective is to undermine political support for the Syriza government until it falls and get a new regime that is preferable to the European partners and the U.S. This is the only strategy that makes sense, from their point of view. They will try to give Greece enough oxygen to avoid default and exit, which they really don’t want, but not enough for an economic recovery, which they also don’t want.

Simon seems to think this is a bit of conspiracy theory nonsense. But given the neocon plutocrats in charge of the EU and IMF, and given how shaky the neocon position is nowadays with economists like Stiglitz & Krugman criticizing them and left political parties rising in power, why should I take seriously the idea that the plutocrats wouldn't want to intentionally sabotage a government that resists them?

FTE - this is nuts, what could possibly go wrong? For the China Dooooom newsbit of the day, the FT points out that nearly all corporate profits in China this year come from stock market gambling. Which is nice. Still, on a fundamental basis China still deserves a high valuation for its stock market, considering the CPC has demonstrated they're the best macroeconomic managers in the world, and China still has a long way to go before they become a Western-level developed nation. In any case, I'm with Billy Bishop, who says he still doesn't expect any sort of market collapse this year.

More later, but I'd like to note at this moment that gold and silver have both popped above their short-term EMAs:

And I'd like to note that this happened after much internetwise bloviating about how gold was going down from here because blah blah summer doldrums and blah blah White people are short, when really it's the White people who don't understand that the gold price depends on India and not White people. Cracker.

So now they'll all say gold and silver went up because blah blah US dollar. You have been warned.

Meanwhile, as for all you Whiteys piddling your frilly little pink panties about gold, because blah blah US interest rate increase and blah blah resources secular bear, I have some Skymet stories for you:

Wednesday, June 17, 2015

I like how he calls the bloat in retained earnings and its share buybacks an "end times mentality. There's no belief in the future, there's just this clinging-on." That's an illustration of the corporate Republican ideology holding back the USA, right there.

Tell me how this figures into your stocks & flows theory of the gold price. I.e., how high does the price of gold have to go before the Holy See decides to strip all the gold off their golden cathedral and sell it for scrap.

“Freedom Commissioner” Tim Wilson has been quoted in The Australian saying that Australian schoolchildren ought to learn more about classical liberal theorists like John Locke. While loath to squeeze yet more material into an already overcrowded curriculum, I’d certainly be glad if there was more awareness of Locke’s actual ideas and actions, as opposed to his prevailing image as an early apostle of freedom. A proper treatment of Locke would have to explain how:

* His theory of natural rights in property was designed to justify the expropriation of indigenous populations
* His advocacy of freedom included support for slavery
* His theory of religious toleration excluded atheists and Catholics
* His theory of political freedom did not extend to freedom of speech.

How then did Locke get such a high reputation? The answer isn’t all that mysterious. Locke was closely involved in the British colonisation of North America, both as an investor and as a participant in political activity such as the drafting of the Constitution of the Carolinas, which ratified the expropriation of the indigenous population and enshrined the absolute power of slave-owners.

When the slave-owning colonists achieved independence from the British Crown, it was natural for them to look to Locke to provide the basis for their political theories (theories that did not preclude the passage of the Alien and Sedition Acts restricting political freedom). Locke then benefitted from the same historical amnesia that has absolved all the US founders from their role in maintaining and extending slavery.

Instead of Locke, it might be better for students to learn about that old-fashioned Tory, Dr Samuel Johnson, who remarked “How is it that we hear the loudest yelps for liberty from the drivers of Negroes”[...]

Oh you di'n't!

And yeah, we didn't learn this about Locke either when we took our enlightenment (Locke-Hume-etc.) class in Philosophy undergrad. Thankfully Nietzsche covered him in Beyond Good and Evil.

Wikipedia - GDP deflator. It's a measure of inflation, insofar as it measures how much of the change in GDP yoy is the result of a change in prices for domestically-produced goods, as opposed to amount produced.

And here's the chart:

And there's a long downward trend since 2006.

So you tell me where the inflation is that the US Fed is supposed to be fighting with a rate increase.

1. Gold miners seem to get sold off when broader US equities are sold off. That's interesting, because there's no particular reason to sell US equities, so the miners sell off on similarly no good reason. Sucks to see the weakness, but it's a good setup if things improve later.

2. Silver today looks like it's suggesting gold will go higher. I doubt people are buying and selling silver to speculate on Greece or the US Fed, so that's a slightly honest indicator.

3. The US market still seems to be piddling its pants about a June rate hike, even though it's not happening. I just have to wonder if it'll go anywhere this summer, once the June meeting is past: people then will be piddling their pants about September, and so on. Oh well; long-term it's better to own US equities than to not.

I have some studying to do today for a test, so posting will be light.

1. Read the book: Snowden only downloaded a pile of files that were already available to thousands of Americans to begin with. That means the Russians or Chinese already got their agents to steal them years ago from the US. The news wasn't that he downloaded those files: the news was that he made their contents available to the livestockthe concentration camp prisoners the citizenry.

2. I in fact said exactly this when I was listening to the story being uncritically repeated on the fucking CBC radio news this morning at 7AM. Good for you, CBC! You just got your own asses punked by the military-fascist complex, and now I know I can no longer trust you either.

In the utopia of the conservatives, they only pass laws that favour those few who elected them, and everyone else loses their citizenship and is labelled an enemy of the state. But in a liberal democracy the elected dictator (me) must serve the needs of the oppressed minorities.

And so while the kittens only came in at #5 on the latest poll, I'm going to give you some cute kitten videos anyway.

After the break so I can see all the parasitic banker scum and junior mining crooks clicking through: